Mortgage exit

boredandundecided

Hi was hoping someone could help.

Our 5 year fixed mortgage wont come to an end til Jan 2012 but the problem we are faced is that I only work part time, we have a toddler and have another baby on the way, I wont be able to afford to go back to work as childcare will cost more than I earn and our current mortgage payments are £600 a month and that's interest free as we are unable to pay the full repayment at the moment as we have other debts to clear too. Partner works 6 days a week but does not earn a great deal, between the tax man and the accountant it's hardly worth working! I know once I go on maternity it's going to be a big big struggle as at the moment I pay the mortgage and the majority of the bills using the tax credits and child allowance along with my wages. Our mortgage is £120k and he just wont be able to pay that plus all the bills on his own. Was wondering if it would benefit us to try and come out of our mortgage arrangement and go on the variable rate which my friends tell me is much more affordable and then have money aside to help clear debts more quickly and to pay extra off on the mortgage. Just trying to get my head round how we are going to keep the house really. Don't want to come to Jan 2012 and they wont renew the mortgage!

Thank you

kingstreet

When your current fix ends, your mortgage will revert to the lender's standard variable rate or whatever the reversion rate was when you took out the mortgage. Check the original KFI or mortgage offer for details.

You may also be offered a new product by your current lender.

Lifes_Grand_Plan

What rate is your current fix at?

And when you say "interest free" do you mean "interest only"... there is a big difference. If you do mean interest free, I want to know how I can get one of those...

Perhaps a rhetorical question, but did you not consider any of this before you decided to get pregnant again?

The problem is at the moment most people think interest rates will go up last 1/4 of this year or early next... You could be jumping out of the frying pan and into the fire.

Have you looked at increasing your income / reducing your outgoings to try and pay the mortgage off quicker?

dimbo61

You cant just come out of your fix and go onto a variable rate!
If you try and leave your current deal you will have Early Repayment Charges!
If you move lender you will also have fees to take out a new mortgage if anyone will lend to you while on maternity leave!
You are only paying Interest only at the moment so have you got a repayment vehicle ( endowment, ISA,s pension etc)
You have a roof over your head which costs £600 a month which I would guess is the same as you would pay to rent a 2/3 bedroom house so go onto the debt free board and see how you can save money/spend less/earn more/ claim any benefits you can

hcb42

dimbo61 wrote: »

You cant just come out of your fix and go onto a variable rate!

Why not, that is usually how it works....;)

OP, if you cannot remortgage when the fix runs out in 2012, you will have to just pay on the variable rate, which might not be a bad thing short term, depending on what your fix was.

boredandundecided

Thanks for all your replies. I did mean interest only, sorry. I did think you were able to come out of the deal but with an early repayment charge but wasn't sure if it would be worth it. We even considered selling and renting but to rent a house the same size is £850 a month and it's just big enough now! We do everything in our power to keep on top of things and not spend unnecessary, we rarely go out we're just about on top of our debts, everything is bought second hand and I sell on eBay what I can. I will check out the debt free board too and maybe something else will help while i'm on maternity, not work shy so happy to do what's necessary. We did think about his before I got pregnant but if we put it off til we were financially ready we would never of had a family to enjoy.

Lifes_Grand_Plan

boredandundecided wrote: »

I did think you were able to come out of the deal but with an early repayment charge but wasn't sure if it would be worth it.

You can.

As you say, there would be an ERC so you would have to know what that is to compare against what you would save by coming out and going onto the lower rate.

Martin used to have a calculator on here to do the sums for you. In fact its still available on the link below and click the "Ditch your fix?" tab:

http://www.moneysavingexpert.com/mortgages/fixed-mortgage-calculator

beecher2

Many lenders won't allow you to come off a fixed rate and onto their SVR so best to check with them as you may have to pick a new deal with them or move lender instead.